Update-2 5/31 2:15 p EDT. Impossible to invest with current Tariff Headwinds-XBI down 1.24% to $79.83. NASDAQ down 1.33%.
Update-1 5/29… Better Tape Today Off Lows Despite 1.1% Drop in IBB and 0.93% in XBI
- One of our top picks from JPM was Amarin (AMRN) up 11.64% to $19 on FDA Fast Tracking their prescription drug Vascepa for cutting cardiovascular risk.
- Amgen (AMGN) and Abbvie (ABBV) stabilized near bottom of 52 week range.
- We saw nice moves up in a few of our microcap holdings e.g. Conformis (CFMS)
- Some green among mid-cap biopharmas: AGIO ANAB CRSP FOLD MRNA NKTR RGEN
- We saw winners among our smaller cap holdings: KPTI MGNX
- The XLV was still down 0.96% showing headwinds for healthcare.
Biotechs Mixed with Bearish Pattern Emerging
Biotechs Mixed today with few good trades buffeted by a weak NASDAQ, lingering concerns about healthcare expenses, slowing global growth and tariffs. And no China deal. With Q2 earnings on the horizon the best we can expect is “holding the fort” and little earnings damage from tariffs.
Technicals Teetering on the Trend Line
- XBI- the bellwether SPDR S&P Biotech XBI took a 1.06% hit today to $82.03, way off the 52 week high of $101.55 in downward trend since early April and barely holding recent lows of $80.
- IBB-the large cap weighted iShares NASDAQ IBB was off 1.25% to $102.90, pretty much tracking major make indices today. The index hit three triple tops at the $114 level in 2019 but has not show much except a feeble rally in early May.
- The XLV held above April lows but down 1.43% today.
- QQQ-the Qs look better up almost 15% YTD but languishing at 3/27 lows with a similar weak pattern to the XBI.
Ok it may not be a gloomy scenario as we are still up in 2019 but we are way off the exuberant biotech top of the summer of 2018 just 9 mos.ago!
Mixed but mainly Down Action Today
- Large Caps surprisingly took a big hit in the last hours except VRTX stayed up 0.58% at $172.56. Biggest losers were ABBV down 2.54%,GILD down 4.37% (Goldman downgrade) and RHHBY down 2.24%. We need to dig deeper to understand the downgrades but suspect it may be generics (biosimilars), “so so” clinical data and the politics of high drug prices. Do not consider drugs a defensive sector even with fat dividends.
- Biomarin (BMRN) lost 5.13% despite encouraging data on gene therapy.
- Gene therapy stocks were down except BLUE, MGTX, RGNX, SRPT. Maybe a $2m drug price tag has dampened enthusiasm for innovative therapies.
- Mid Caps Mixed: mid caps are trading near the low-end of the 52 week range- BMRN, IMMU, LGN,NKTR, etc with a few taking 5% hits today. Winners today and at higher end of 52 week range-ARNA, ARRY, NVCR, RGEN.
Although we had a few winners lately the overall market action looks very bearish and makes me much more cautious particularly with adding new positions. And we haven’t searched the news to look for more reasons for healthcare stock weakness .But look at the potential for upbeat news from ASCO impacting specific stocks. So you think we can rally with a trade war with China, an inverted yield curve and pressure on healthcare costs?
Update after tomorrow close.
Disclosure long ABBV GILD MGTX XLV